Control
On these pages, I have followed the saga of Earlham College’s efforts to maintain control over Conner Prairie, a living history museum, located in central Indiana. At the heart of Earlham’s problem with the museum is the concept of charitable trusts. When a donor makes a bequest or gift of real estate to an institution, the ability of the institution to sell, modify or destroy portions of the real estate in the future will depend on many factors.
The easiest way to determine the extent of the institution’s authority to dispose of the real estate would be for the person making the gift to set out his or her intentions for the future in a trust document. This way, the institution knows up front what the limitations are, and can reject the gift if the limitations are not to its liking. A cruder way of accomplishing this would be to put conditions into the deed that would limit the use the real property could be put to, giving the original owner or his/her heirs the right to take the property back if the limitations were not abided by.
But what if there are no such instructions or explicit limitations? With Conner Prairie, Earlham received a 58 acre farm with the old Lilly homestead on it some 40 years ago. There were conversations between the Lilly patriarch and the president of the college at the time regarding the College maintaining the property and opening some type of museum on the grounds. These conversations between two friends have been recounted by the survivor, Landrum Bolling here.
Because the gift of the farm to Earlham was for caretaking, the Indiana Attorney General claims that the gift created a charitable trust, meant to benefit the public. This broad intention to benefit the public, says that AG, gives him jurisdiction to investigate the management of this “public” asset. The bigger question in the Conner Prairie case is not the status of the farm, but the status of the millions of dollars that flowed from Lilly to Earlham in the subsequent years, and now provide a large part of the endowment that supports the successful museum and the college itself.
Maria Oddi, of the Indiana Law Blog pointed me to another struggle working its way through Indiana courts regarding public trusts:
A ruling in Vanderburgh Superior Court Tuesday puts a stop to the demolition of the chapel on the grounds of St. Mary’s Medical Center in Evansville. St. Mary’s plans to appeal the decision.
The ruling, from Judge Scott Bowers, states the donation of the chapel some fifty years ago is a charitable trust. And in the court’s eye, that means St Mary’s can’t make any changes, investments or expenditures, without consulting the donor’s family or heirs. Family attorney Charles Berger says, “What the judge did find was that the action of creating a permanent memorial was a bequest that creates a charitable trust. And the church is a charitable trust in the eyes of the law. The hospital violated the law in tearing down, beginning the destruction of the chapel without court permission.”
So, the judge rules St Mary’s is permanently enjoined from destroying the chapel, and must now refurbish and restore it to its original condition, and at St Mary’s cost. St Mary’s has already dismantled the interior of the chapel and removed the stained glass windows.
Link.
The hospital determined that it needed to tear down the structure to make way for a new heart center. Private colleges and hospitals are not state bodies, but through history, they have been considered to be be “Public” institutions, contributing greatly to the fabric of our society. This vision of these institutions often inspired individuals to see them as appropriate depositories of valuable assets of general interest to the community. Now, like everyone else, they are just businesses competing in the marketplace. Can a modern hospital really be expected to serve as the permanent property manager for a chapel? Where does that fit into their core mission? Will incurring the expense of maintaining such an old structure and making it available to the public bring the hospital any profit? Obviously, the hospital saw a new heart center to be a better investment. The lesson for the hospital, though, is you cannot take the benefits of a gift without taking on the burdens.
